Bain Capital reportedly weighing sale of Direct Line rival esure

Private equity giant Bain Capital is reportedly considering selling British motor and home insurer esure in the latest sign of M&A in the sector.

Bain has lined up advisers including Fenchurch Advisory Partners for a possible sale, Reuters reported.

A person familiar with the matter reportedly said esure could be worth at least £1bn based on its improving profit outlook.

Reuters said sources had put forward Belgian insurer Ageas as a potential bidder, with the firm saying earlier this year that it wants to expand in UK general insurance. Ageas abandoned its attempt to acquire Direct Line, a larger rival of esure, in March.

Ageas uses the same technology platform as esure, while its smaller size compared to Direct Line’s £2.4bn market capitalisation could make it a more manageable takeover target.

Bain and Fenchurch declined to comment. Ageas said it never comments on market rumours.

The news comes as the latest signal of M&A activity in the sector as British motor and home insurers grapple with the higher cost of repairs and claims inflation.

Still, esure reported a 17 per cent rise in turnover in the first half of 2024 and said it had finished modernising its technology. The firm made a £16.7m trading loss in 2023.

Esure was established in 2000 by Direct Line founder Peter Wood and had been listed on the London Stock Exchange before Bain acquired it for £1.2bn in 2018. Its products include careful driver brand Sheilas’ Wheels.

Alongside Direct Line, analysts have said listed Lloyd’s of London insurers could attract takeover interest following news earlier this summer that Japan’s Sompo and Italy’s Generali were considering making bids for Hiscox.

London-listed firms have been relentlessly targeted by takeover bids this year, driven by their cheap valuations, particularly relative to overseas rivals. Among them, specialist insurers continue to trade at a heavy discount compared to pre-pandemic levels.